Starting Out Poor Often Leads to a Low-Productivity Path Among young people, poverty strongly increases the chance to be out of school and out of work. Being neither in school nor at work captures the difficulty of labor market insertion as well as the lost potential of young people to become more productive adults later on. Available data from Egypt, Jordan, and Morocco demonstrate that the likelihood of poor young men to be in this state can be twice as high as that of young men in higher-income families. For instance, in rural Morocco, more than 40 percent of young men in the bottom two quintiles were out of school and out of work in 2010, compared with only 20 percent of those in the top two quintiles. As young, poor individuals in the Middle East and North Africa struggle to accumulate the two key assets to succeed in the labor
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FIGURE 2.10
Likelihood of Refusing a Job, by Education Level, in the Middle East and North Africa, 2009 70 Individuals refusing a job offer, %
60 50 40 30 20 10 0
d A Djib ra ou Eg b Em ti yp ira t, A te ra s Yem b Rep en . ,R ep Alg . er Ba ia h ra We st B T in an unis k a ia nd Sa Gaz ud a iA rab Mo ia roc co Syr Ira q ian Ara Kuw b R ait ep ub lic Jor da n Qa t Leb ar an on Lib ya
the region has led to the creation of mostly low-quality, low-paid jobs (World Bank 2012c). Among those who do find a job, informality (defined as not having access to social security) is rampant, and especially so for young people, women, and the low-skilled. In fact, informality in the Middle East and North Africa (67 percent of the workforce) is higher than in other middle-income regions, such as Latin America (61 percent) and Europe and Central Asia (40 percent). In addition, it is well known that the Middle East and North Africa has the world’s highest unemployment rate, and how these jobs are allocated plays to the disadvantage of the poor. One-third of individuals interviewed by Gallup in non-Gulf Cooperation Council countries thought that the main obstacle to youth employment was the lack of acceptable jobs for new labor market entrants. Another fifth of respondents thought that the main challenge was that jobs are given only to the connected people (Gallup and World Bank 2009). Because the poor tend to have smaller networks in addition to lower human capital, they are at a double disadvantage in their chances to land a good job. It is no surprise, then, that in some countries poor households are more likely to have no single member employed. As many as 23 percent of people in Morocco live in households with no employed member; in Jordan, 17 percent do so, and in Egypt, the figure is 10 percent. Households with no one employed are not necessarily poor, as they can receive other sources of income such as rent, pensions, or remittances. However, in Jordan and Morocco, households in the lower-income quintiles are indeed those most likely to have no member employed, with 25 and 36 percent of households, respectively, without a single member working. This is not so in Egypt, where only 7 percent of poor households are in this situation. Such patterns are likely to differ across countries according to migration opportunities and the propensity to cohabit in the absence of a male household head.
The Challenge: Poverty, Exclusion, and Vulnerability to Shocks
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Inclusion and Resilience: The Way Forward for Social Safety Nets in the Middle East and North Africa
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Elementary education
Secondary education
Tertiary education
Source: Gallup Inc. 2009.
market—experience and postbasic education—joblessness at a young age is likely to affect earning potential later on. Unemployment among the poor is less likely to be the result of choice, and more likely due to lack of work opportunities. Middle Eastern and North African countries experience the world’s highest unemployment rates. However, the reasons for unemployment are heterogeneous. Among some groups, unemployment may be a strategic choice to maximize the chances of ending up in the desired job by increasing the search period. Among others, unemployment may simply be the result of the inability to find any job. The available evidence suggests that individuals who are poor and unemployed are more likely to be in this condition because they cannot find a job, not because they are waiting to find a better job (World Bank 2012c). For instance, the Gallup data in figure 2.10 show that the likelihood of refusing a job is far lower among the lowskilled (largely poor) than among the higher-skilled, signaling that unemployment for this group of individuals is less of a choice than for those who are better off.
Few Options and Incentives for Women in the Labor Force Another factor explaining the high rate of joblessness in poor households relates to the labor force participation rate of unskilled women. Female labor force participation is historically low in the Middle East and North